10:53 CHENGDU PUTIAN<01202> - Announcement (2) of RMB1,433,333 will be payable within 15 days from the date the new business licence reflecting the transaction is issued for Chengdu MCIL by the relevant government authority. All consideration will be payable in cash from Shuangliu's internal resources. The aggregate consideration of the aforementional transactions represent a 50% discount to 30% of the audited net asset of Chengdu MCIL. The Sale and Purchase Agreement will be effective as from 31 March 2005. REASON FOR ENTERING INTO THE SALE AND PURCHASE AGREEMENT In December 2004, MCIL notified the Company that it decided to sell its entire equity interest in Chengdu MCIL after reviewing its own internal financial situation and development strategy in the PRC. According to the articles of association of Chengdu MCIL, in the events that one equity holder decides to dispose of its equity interest in Chengdu MCIL, the other equity holder and/or an external party(ies) will have to acquire such equity interest or otherwise Chengdu MCIL will have to go into liquidation. After reviewing and evaluating the development and the business of Chengdu MCIL, the Directors decided to enter into the Sale and Purchase Agreement to acquire the 30% equity interest of Chengdu MCIL from MCIL. The Directors, including the independent non-executive Directors, believe that the terms of the Sale and Purchase Agreement are fair and reasonable as far as the Company's shareholders are concerned and the entering into the Sale and Purchase Agreement is in the best interest of the Company and its shareholders as a whole. Discloseable and CONNECTED TRANSACTION As at the date of the Sale and Purchase Agreement, MCIL owns 30% of the equity interest of Chengdu MCIL and therefore MCIL is a connected person of the Company under the Listing Rules. Accordingly, the Sale and Purchase Agreement constitutes a connected transaction for the Company under the Listing Rules. As each of the percentage ratios (as defined in Rule 14.07 of the Listing Rules) is less than 25% and the aggregate consideration under the Sale and Purchase Agreement, being RMB8,600,000 (approximately HK$8,113,207.55), is less than HK $10,000,000, the Sale and Purchase Agreement is only subject to the reporting and announcement requirements set out in Chapter 14A of the Listing Rules. Relevant details will also be included in the next published annual report and accounts of the Company in accordance with Rule 14A.45 of the Listing Rules. According to the Listing Rules, the Sale and Purchase Agreement also constitutes a discloseable transaction for the Company which is subject to the notification and publication requirements as set out in Rules 14.34 to 14.39 of the Listing Rules. A circular containing, among other things, details of the Sale and Purchase Agreement will be despatched to the shareholders of the Company as soon as practicable. INFORMATION RELATING TO Chengdu MCIL Chengdu MCIL is a sino-foreign joint venture company established in the PRC on 8 February 1999 and it was owned as to 70% by the Company and 30% by MCIL as at the date of the Sale and Purchase Agreement. Chengdu MCIL is principally engaged in the manufacture and sale of cable, parts and components for wireless telecommunications system networks. Based on the relevant accounting rules and standards applicable in the PRC, the audited net asset of Chengdu MCIL as at 31 December 2004 was RMB53,235,600.09 (approximately HK$50,222,264.24). The net loss of Chengdu MCIL for the financial year ended 31 December 2003 was RMB3,730,221.40 (approximately HK$3,519,076.79) and the net profit of Chengdu MCIL for the financial year ended 31 December 2004 was RMB640,177.53 (approximately HK$603,941.07). INFORMATION RELATING TO SHUANGLIU Shuangliu is principally engaged in the manufacture and sale of cable joining sleeves. As at the date of Agreement, Shuangliu was owned as to 66.67% by the Company and 33.33% by Jindu Village, Baijia Town, Shuangliu County, Chengdu, the PRC. INFORMATION RELATING TO THE COMPANY The Company is principally engaged in the manufacture and sale of various types of telecommunications cables (including different types of copper cables), optical fibres, cable joining sleeves, as well as equipment, manufacturing parts and materials for the production of cables. INFORMATION RELATING TO MCIL MCIL, part of the Mitsubishi Group of companies which is a renowned international conglomerate, provides, inter alia, cable products and engineering services to meet the needs of global communication and power supply markets. DEFINITIONS